Archive for May, 2012

All Commercial Real Estate Sectors Continue to Improve

Thursday, May 31st, 2012

Fundamentals across all commercial real estate sectors continue to improve from their low points during the recession. According to a report from the National Association of Realtors, ongoing job creation, which is at a higher level this year, is fueling an underlying demand for commercial real estate space, assisted by a steady increase in consumer spending. Vacancy rates are gradually declining across all sectors paired with generally modest rent growth.

Experts expect the economy to add around 2.5 million jobs both this year and in 2013, which is good news for all facets of commercial real estate. However, there still remains a large problem with properties priced under $2.5 million as little capital is available for small business, which is impacting transactions. There are several less restrictions to lending for larger properties.

To read the full article from RISMedia, including a rundown on the individual sectors, click here.

Posted in Economy, Industrial, Multi Family, Office, Real Property, Retail | No Comments »

ICSC’s RECon Attendees Upbeat despite Slow Retail Recovery

Wednesday, May 30th, 2012

Paradigm Tax Group again attended ICSC’s RECon convention, an annual retail deal-making event held in Las Vegas, where there was an increase in attendees, deal activity, and overall energy. However, according to the CoStar Group, enthusiasm among the 32,000 attendees was tempered by a healthy dose of realism forged during several years of diminished activity, along with a recovery that’s far weaker than the recovery following the previous down cycle a decade ago.

The fact remains that there are very little high-quality retail properties to acquire, and while development has increased, the pace of which is nothing to get overly excited about. Still, compared with the past few years and since the recession, the general buzz around the convention was upbeat about the future of the market and opportunities within. A cautious optimism seems to be the overall consensus as more meetings and deals are being completed, but uncertainty remains regarding the current state of Europe and how that affects our banking and lending institutions.

Posted in Economy, Real Property, Retail | No Comments »

California Can’t Afford ‘Split Roll’ Tax

Tuesday, May 29th, 2012

Proposals to increase business property taxes could make the already difficult California business landscape an even harder place to run a successful company. According to SF Gate, California small businesses failed at a rate of 69% higher than the national average in 2011, with four of the top five metropolitan areas for small-business bankruptcies coming from the state. When paired with the fact that California has the third highest unemployment rate in the nation, any proposal that makes it more expensive to conduct business in the state could be bad news for local businesses.

The proposal on the table calls for a ‘split roll’ taxing system where property taxes are levied at a higher rate on business and industrial buildings than on homes. This can affect not only those businesses operating on razor-thin margins that own their buildings, but also those that rent as most leases contain provisions that require them to pay the property taxes associated with their facility. A study by Pepperdine University shows that an implantation of the ‘split roll’ regime would increase property taxes on businesses by an estimated $6 billion.

To read the full article from SF Gate, click here.

Posted in Economy, Personal Property, Real Property, Western | No Comments »

Bills Allowing for Property Tax Breaks Pass Senate in Louisiana

Friday, May 25th, 2012

Bills that will allow local governments in Louisiana to recruit companies with the promise of exemption from property taxes have passed the Senate easily. According to NOLA.com, the bills call for a statewide constitutional referendum in November that would authorize the tax breaks and set in place the rules of the program. The bills will move back to the House where they will have to agree upon changes made by the Senate.

The program will target the building of new, or expanding of old, corporate headquarters, distribution centers, data centers and R&D operations for a ten-year property tax exemption. Retail centers can also qualify for the program if the new facility they are building will employ over 50 people in a shared service center. They must also spend at least $25 million on the facility and 50% of the company’s sales must be out of state or go to Louisiana businesses that resell the products out of state.

To read the full article from NOLA.com, click here.

Posted in Mid America, Office, Real Property, Retail | No Comments »

Obtain a Tax Clearance before Purchasing a Hotel

Thursday, May 24th, 2012

When buying an operating business such as a hotel, many purchasers forget to obtain a tax clearance certificate from the state in which the business is operated before the sale is closed. A Tax Clearance Certificate is a certified statement from the state department of revenue which states that all tax returns have been filed and that all taxes owed by the owner have been paid.

A tax clearance certificate protects the buyer of a business from having to pay any sales and use tax owed by the business that is being purchased. This successor liability also applies when assets are purchased. If a tax clearance is not obtained and the prior owner did not pay their state sales taxes, withholding taxes, and various state excise taxes, the new owner will be required to pay any tax, interest and penalties that would have been due from the prior owner. (more…)

Posted in Paradigm Info | No Comments »

Boston Property Taxes Show Modest Gain after 2-Year Dip

Wednesday, May 23rd, 2012

Property tax rolls for the city of Boston, Massachusetts are growing modestly due to new construction and commercial properties previously being tax exempt. According to The Boston Globe, after two years of decline, the increase in tax revenue in the area can largely be attributed to new office towers, the expiration of tax breaks, and the sale of two Catholic hospitals to a for-profit company. Overall, the state of the city’s current fiscal health is very positive.

Values of business properties increased for the first time since the end of June 2009. Among the increases include the previously mentioned acquisition of two hospitals to Steward Health Care System, who is now on the hook for $287.3 million in property taxes. In addition, the growing office market, whose values increased nearly 4%, may have seen a modest increase in comparison to previous booms, but nonetheless demonstrates a positive direction.

To read the full article from The Boston Globe, click here.

Posted in Construction, Eastern, Economy, Nonprofit, Office, Real Property | No Comments »

NYC Commercial Real Estate Market Shows 52% Increase

Tuesday, May 22nd, 2012

The commercial real estate market in New York City showed a 52% year-over-year increase in Q1 2012, with transactions amounting to just under $5 billion in sales volume. According to research from PropertyShark.com, the number of closed transactions (849) remained stable in the first quarter compared to the previous, and rose by 25% year-over-year. Office and multi-family were up 34% and 31% respectively to $2.52 billion and $1.44 billion in sales.

Manhattan led the charge with 83% of the total sales, $4.1 billion in all. The top ten largest deals generated more than $2 billion, or about 40% of total sales volume. In addition, transactions of over $5 million accounted for a total of $4.19 billion in sales in Q1 2012, contributing 84% to the overall commercial sales volume.

Posted in Eastern, Economy, Multi Family, Office, Real Property | No Comments »

Iowa Legislature Ends without Commercial Property Tax Compromise

Monday, May 21st, 2012

The 2012 Iowa legislative session will likely be known for its failure to once again find a compromise on how to deliver property tax relief to commercial and industrial property owners. According to the Sioux City Journal, members of the Republican controlled House and Democrat-led Senate worked for 122 days on various ways to provide property tax reform without undercutting local governments or shifting tax burdens to homeowners and farmers, and failing to reach a resolution.

In the end a resolution couldn’t be decided between the House, who wanted to phase down the business rollback by cutting assessed values from 100% to 90% by 2017 and allocate up to $140 million a year to local governments, and the Senate, who looked to raise up to $25 million a year over five years to offset a proposed 7.2% rollback. While relief from property tax burdens would have significantly helped Iowa businesses, the employment situation and economic condition of the state is generally improving.

To read the full article from the Sioux City Journal, click here.

Posted in Mid America, Real Property | No Comments »

Retail Lifestyle Centers Launch a Comeback

Friday, May 18th, 2012

Lifestyle centers exploded in the mid-2000s, but experienced hard times during the recession due to the fact that many were built in developing areas with no anchor tenants. According to Retail Traffic, lifestyle centers are following in the footsteps of other retail formats and making a comeback as better positioned properties are drawing interest from investors. In general, retail is doing better and sales are increasing at several projects that struggled during the recession.

With lifestyle center activity increasing already, more is expected in the coming months with many of the properties more than likely changing their focus to fill vacancies with neighborhood daily needs and service and quasi-office tenants. However, even though there is more interest in the market, the trend still remains that the quality of the property will drive its success. The better quality the center, the more demand there is.

To read the full article from Retail Traffic, click here.

Posted in Economy, Real Property, Retail, Strip Centers | No Comments »

Malls Make a Comeback, but with Little New Development

Thursday, May 17th, 2012

Investor interest in malls has recently perked up as sales volume on prime retail properties nationwide was up 87% year-over-year to $12.5 billion during the first quarter of 2012. According to Real Estate Forum, from the buyer’s standpoint, the acquisition of a mall can represent a value-add opportunity at this time. For example, many investors are combining proactive management, a focus on leasing, and cosmetic and other improvements to add value to malls through a more pleasant and practical shopping experience. So far this approach has been successful.

Still, despite improved fundamentals in retail and with shopping malls specifically, experts don’t expect many new malls to be coming on line any time soon. You will see new construction here and there in underdeveloped markets, but for the most part you are going to see investors snapping up existing product for repositioning opportunities in place of new development.

To read the full article from Real Estate Forum, click here.

Posted in Economy, Malls, Real Property, Retail | No Comments »

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